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May 13, 2013

New Thomson Reuters Report Breaks Down the President's Fiscal Year 2014 Budget Proposal

NEW YORK – Thomson Reuters has released its special report "President’s Fiscal Year 2014 Budget Contains Host of Individual and Business Tax Provisions." The report is designed to help CFOs, corporate tax directors, CPAs, and accounting professionals assess the potential impact of the budget proposal released by President Obama last month.

The report, written by tax analysts at Thomson Reuters, covers nearly a hundred key tax provisions in a brief, easy-to-follow format.

"Businesses will welcome the proposal for the permanent research credit and expensing deduction," said Jim Fegen, senior vice president of Thomson Reuters Checkpoint. "Higher earners with incomes over $1 million, on the other hand, will not be happy about the prospect of paying at least 30 percent of their income in taxes under the ‘Buffett Rule.’ And elderly individuals on fixed budgets may consider the use of chained CPI as the administration’s effort to find a politically safe way to cut Social Security."

Thomson Reuters special report covers proposals for business taxation, the insourcing of jobs, international tax, environmental and energy credits and deductions, tax changes for individuals, estate and gift tax, and miscellaneous tax.

Following are examples of key provisions explained in the report:

  • Permanently extending the expensing of qualified property for small businesses, the research tax credit (with an increase in the credit from 14 percent to 17 percent), and the work opportunity tax credit (with a change to the calculation).
  • Creating a new business credit against income tax equal to 20 percent of the eligible expenses paid or incurred in connection with insourcing a U.S. trade or business. And disallowing deductions for expenses paid or incurred in outsourcing.
  • Deferring the deduction of interest expense allocated and apportioned to a taxpayer’s foreign-source income that is not currently subject to U.S. tax.
  • Replacing the credit for plug-in electric vehicles with a credit for the production of qualifying "advanced technology vehicles."
  • Applying the Buffett rule by requiring millionaires to pay no less than 30 percent of income (after charitable contributions) in taxes. Returning the estate, generation-skipping transfer (GST), and gift tax exemption and rates to 2009 levels, beginning in 2018. The top tax rate would be 45 percent, and the exclusion amount would be $3.5 million for estate and GST taxes, and $1 million for gift taxes.
  • Beginning in 2015, changing the measure of inflation used by the federal government for most programs (and for the Internal Revenue Code) from the standard Consumer Price Index (CPI) to the alternative chained CPI. In general the chained CPI grows at a slower pace by fully accounting for a consumer’s ability to substitute between goods in response to changes in relative prices.

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